Molecular modeling is fast becoming an important tool in chemistry and biochemistry. Presently there are useful forcefields, and friendly molecular mechanics and molecular dynamics programs available to the novice, and in time these methods should play a very important role in computer aided molecular design (CAMD). Protein folding and membrane formation, among other things, depend crucially on how water molecules interact with each other and with chemical groups on chain molecules. It is becoming clear that the simple fixed charge two-body electrostatic water potential models already in use in biological simulations and in CAMD ignore important effects, and may overestimate solvent separated hydrophobic pairs over contact pairs. These models also cannot describe ion hydration accurately. The main objective of this proposal is to devise an accurate potential model for water, one that includes many-body dispersion interactions and electrical induction effects. The goal is to be able to model interfacial properties of water, the hydrophobic effect, and ionic hydration accurately with one self-consistent potential model. By implanting dispersion oscillators in the water molecules and treating these oscillators by modern path integral methods we propose to devise a model that will be useful for biological simulations. This model contains all of the important effects left out in current two-body electrostatic models routinely used in simulations. With this new model we propose to study hydrophobic aggregation, water induced chain folding micelle formation, and the solvation of ions. The proposed research will provide new methods and algorithms for use in biological simulations.